Renew On Line (UK) 31

Extracts from the May-June 2001 edition of Renew
These extracts only represent about 25% of it

Green Fuels Challenge

Last Nov., the Chancellor announced a Green Fuels Challenge, which aimed to stimulate industry to propose practical alternative transport fuel options - the most promising ‘alternative fuel’ should then qualify for major cuts in duty rates in the next Budget statement. Environment Minister Michael Meacher and Transport Minister Gus Macdonald subsequently invited fuel producers, motor manufacturers, environmental groups and others to provide information on a range of environmental, health and safety and vehicle performance issues.

The Ministers said they were ‘searching for fuels which, in both the short and longer term, cut emissions of harmful local pollutants and greenhouse gases and help cut other environmental impacts, such as waste’. The joint DETR and Treasury press release said that ‘increasing use of green fuels will additionally allow the United Kingdom transport system to start cutting its dependence on crude oil and its dramatic price fluctuations’. Michael Meacher commented: "This is an exciting opportunity for industry. The Green Fuels Challenge shows that Government is putting its money where its mouth is in tackling pollution and encouraging greener motoring". Financial Secretary, Stephen Timms said: "The public and the government want viable green fuels. The best fuels from the Green Fuel Challenge will be given significant duty reductions in the budget to achieve this aim".

Inviting entries to the Challenge from all comers, the Government also said that it was ‘particularly keen to promote the use of recycled materials, and would welcome proposals for the use of waste-derived fuels - provided of course they meet other environmental criteria’.

In the event 64 proposals emerged, and in his Budget 2001 statement Gordon Brown announced the results of the competition- a series of duty cuts for alternative fuels for the short, medium and longer-term, with biodiesel coming out as the main immediate winner, in addition to the so called ‘road fuel gases’ - compressed natural gas (CNG) and liquefied petroleum gas (LPG).

Thus, in addition to the arguably less environmentally welcome step of knocking 1p/litre off the price of Ultra Low Sulphur Petrol (ULSP) and 3p/litre off the price of Ultra Low Sulphur Diesel (ULSD), Budget 2001 announced ‘a new duty rate for bio-diesel set at 20 pence per litre below the ULSD rate to be introduced in Budget 2002. This will offset the additional production costs of bio-diesel and permit the UK to benefit from the reduced greenhouse gas emissions that this fuel can offer. Bio-diesel sourced from waste vegetable oils will also provide a useful outlet for oils which may otherwise be poured away into landfill sites or disposed of down the drain’.

Budget 2001 also cut duty on road fuel gases to 9% per kg, and promised not to increased this duty in real terms until 2004 at the earliest. For the longer term, to stimulate further work in the field of alternative fuels, the Budget report notes that ‘Pilot projects for hydrogen, bio-ethanol, methanol and biogas are expected to be introduced during the course of 2001’. And it therefore introduced ‘enabling legislation to allow for the introduction of duty reductions or exemptions for pilot projects’.

Overall, the budget report concluded ‘this approach towards green fuels provides for environmental benefits in the short term from LPG, CNG and bio-diesel, looks to new fuels for the medium-term with bio-ethanol and biogas, and paves the way for the future with the fuel-cell favourites of methanol and, most significantly, hydrogen. This demonstrates the Government's ongoing commitment to delivering both air quality and climate change benefits through increased use of more environmentally friendly alternative fuels in the UK and supports the UK’s early steps towards a hydrogen-based fuel economy’.

The 20p/litre cut in duty on biodiesel puts us a bit more in line with practice in the rest of Europe- where it’s often zero rated (see Groups). However, UK suppliers are few and far between, and some people have been tempted to take matters into their own hands- see our Forum section for one persons practical experience with using vegetable oil from a supermarket! That’s even cheaper! Our Technology section looks at the environmental case for biodiesel: it’s good in terms of emissions, although perhaps less so in terms of land use compared say to energy crops for electricity or heat production.

Alternative Vehicle Fuels

Consulted to Death?

‘We are now looking seriously to the future, assessing what path we should take to ensure that these fuels and technologies reach their full potential.’ So said Lord Whitty, the transport minister, in a speech on green fuels to the Parliamentary Renewable and Sustainable Energy Group (PRASEG) in February. But for the moment, all that seemed to mean was more consultation exercises.

Consultation is a wonderful thing- but it can be used to avoid making decisions. It span out the renewables review for two years, and it is not clear that the result was much improved by the process. Now we are in the middle of another long drawn out consultative process- on green transport fuels. As Lord Whitty. noted, following the Treasury’s Green Fuels Challenge, there are to be a whole series of new consultation exercises.

First off the DETR, along with the Energy Saving Trust, who manage the Powershift programme, is to consult on how it can best support the development of the market for alternative fuels, asking should it ‘move away from converting petrol cars to alternative fuels, given the more limited emissions benefits and focus instead on converting vehicles that traditionally use diesel - such as trucks, vans, buses and taxis - where air quality benefits are more significant’.

Next the DETR is to issue a consultation paper on new and emerging fuels and technologies, looking at ‘those fuels and technologies that are not yet on the market, but which offer great environmental benefits in the longer term’. Whitty added that through this consultation ‘we hope to identify the barriers that currently exist to bringing such fuels and technologies onto the market and into use. This will not just focus on the fiscal incentives government can offer, but the wider range of policy and regulatory tools at its disposal’.

Following this consultation exercise he said the DETR intend to publish ‘a longer-term strategy to promote the development and introduction of new fuels and technologies that offer significant environmental benefits’. Not before time! To be fair though, the transport issue is one where there are strong and divergent views. Even within the relatively narrow area of green fuels, there are a host of rival options all vying for dominance. That was very apparent at the PRASEG meeting- with proponents of ready-to-go options like biodiesel and natural gas battling it out amongst themselves and against the proponents of longer term options like fuel cells and the use of hydrogen- over issues such cost, emissions, reliability, safety. There are also wider strategic issues. For example, in relation to renewables, Whitty asked ‘is it better to use such sources - such as dedicated energy crops- to produce road fuels or in applications such as electricity production or combined heat and power?’